Introduction to this report:
The industry is booming, the company's multiple bases and projects are active, and 24H1 performance is growing at a high level. 2024-2026 will usher in a period of production capacity release. Intelligent production will improve quality and efficiency, strengthen brand building, and help increase the company's value.
Key points of investment:
Maintain an “Overweight” rating. Affected by fluctuations in raw materials and exchange rates, the company's 2024-2026 EPS was reduced to 0.38/0.64/0.76 yuan (previously 0.44/ 0.73/ 0.85 yuan). The company has a relatively large increase in production capacity and strong growth. The company was given 16 times PE in 2024, and the target price was lowered to 6.08 yuan (originally 7.83 yuan).
24H1 showed high performance growth. 24H1's revenue was 3.068 billion yuan, +36.91% year over year; net profit to mother was 0.286 billion yuan, +393.32% year over year; after deducting non-net profit of 0.275 billion yuan, +514.84% year over year.
Among them, 24Q2 revenue was 1.624 billion yuan, +36.32% YoY, +12.56% month-on-month; net profit to mother was 0.133 billion yuan, +184.94% YoY, -12.48%. Semi-steel orders continue to be in short supply; production capacity at factories in Thailand and Cambodia accelerated, and the first phase of the Cambodia project was fully completed in May. The company's production and sales increased significantly over the same period last year. 24Q2 tire production was 4.6843 million bars, +57.95% YoY, +12.50% month-on-month; sales volume was 4.3322 million bars, +50.86% YoY, +15.59% month-on-month, and the price of Q2's tire products increased by about 0.77% month-on-month.
The boom in the industry continues, and the impact of short-term disruptions on the cost side is limited. Domestic tire production, sales and exports remain high. Shipping costs have risen sharply due to geographical influence. Considering that domestic tire companies account for a higher share of the North American market, orders sent to Europe can bypass the Cape of Good Hope, and subsequent new ship launches, the impact will gradually slow down. As of August 23, the average daily price of natural rubber was 14,933 yuan/ton, a monthly increase of +3.28%, a quarterly increase of +4.30%, a half-year increase of +13.27%; carbon black was 7,600 yuan/ton, a monthly increase of -3.80%, a quarterly increase of -5.00%, and a half-year increase of -8.43%.
Multiple bases and multiple projects go hand in hand, and intelligent manufacturing sets sail. GM has implemented the “5X” strategy. Currently, it has three bases in Wuxi, Thailand, and Cambodia. Many projects are progressing smoothly, and production capacity is being released in an orderly manner. 2024-2026 will usher in a period of release of the company's production capacity, and the company's growth is strong.
The company continues to promote the upgrading of the international, intelligent and green industry; the all-steel smart factory accelerates industrial quality and efficiency; the vulcanization “black light workshop” achieves 24-hour uninterrupted production, greatly improving production efficiency and saving energy consumption; the company focuses on brand building, and multi-brand comprehensive technologies such as “Qianlima and Red Rabbit Horse” have reached the international advanced level and won wide recognition in the market.
Risk warning: projects under construction fall short of forecast; trade policy risks; sharp fluctuations in raw materials and shipping prices; risk of exchange rate changes